Govt working on options to clear 1,038 used cars

ISLAMABAD: The government is working on different options to grant permission for clearance of 1,038 used cars imported in violation of the commerce ministry’s rules.

The used cars currently stand parked at the country’s ports. The local auto industry is already facing numerous difficulties, as reportedly the car sales have witnessed almost 50 per cent decrease.

After the commerce ministry placed a stringent mechanism, cars imports in violation of rules continued after January 2019 and now the total number of imported cars stuck up at the ports has crossed 1,000.

The budget is also silent on this issue. It is not yet clear how many cars will be cleared after payment of heavy penalties. “We have raised this issue several times and sent out reminders, but so far no decision could be made in this regard,” said a top official while talking to The News Monday night.

Now hectic lobbying is underway to change the rules in order to facilitate commercial imports of used/new cars. The Ministry of Commerce had made stringent rules last year for import of three-year-old used cars and placed the condition of bank account details of importer and close relative allowed to clear such vehicles. “Now there are 1,038 cars stuck up at ports, which were imported in violation of rules. There is a demand to grant one-time relaxation,” said the official.

However, official sources claimed that they were in a catch-22 situation because if they relaxed rules it would be alleged that importers had used money and influence, and if they discouraged imports then it would be alleged that manufacturers’ influence was working against imports.

The meeting discussed the possibility of introducing a scheme for commercial importers taking into account the views of Finance Division, Commerce Ministry and the Federal Board of Revenue (FBR).

According to the Finance Division, the Import Policy Order, 2016 of the Commerce Division envisages various vehicles import schemes e.g. personal baggage, transfer of residence and gift schemes for overseas Pakistanis. This regulatory instrument allows the import of new or used vehicles and is aimed to facilitate bona fide overseas Pakistanis.

However, the schemes were reported to have been misused by the commercial importers, who would use the passports of overseas Pakistanis while only around 5 per cent of cars were actually being imported by genuine overseas Pakistanis.

This had led to an outflow of foreign exchange from the country through Hawala/Hindi and there was need for corrective measures to deter this practice. Hence, the Commerce Division prescribed a clear transaction mechanism to curb this practice and moved a summary for the ECC of the Cabinet which introduced the following mechanism through an amendment to Appendix-E of the Import Policy Order.

"All vehicles in new/used condition to be imported under transfer of residence, personal baggage or under gift schemes, the duty and taxes shall be paid out of foreign exchange arranged by Pakistani nationals themselves or local recipient supported by banks encashment certificate showing conversion of foreign remittances to local currency, as under:- (i) the remittance for payment of duties and taxes shall originate from the account of Pakistani national sending the vehicle from abroad and; (ii) the remittance shall either be received in the account of Pakistani national sending the vehicle from abroad or, in case his account is nonexistent or inoperative, in the account of his family."

After this placement of mechanism, now over 1,000 imported cars stand parked at the ports waiting for clearance. Efforts are underway to get one-time waiver and then bring a permanent change in the policy.

Originally published in The News